The Australian dollar dropped to four-year lows on Thursday as bears were in no mood to let a solid Australian jobs report interfere with a selling momentum. The New Zealand dollar fell in sympathy to two-year lows amid broad-based strength in the US dollar. The Australian dollar was deep under water at $0.8590, having gone as far as $0.8553, its lowest since 2010. It has shed 3-1/2 cents in just a week and charts pointed to more downside.
Support was found around $0.8545-50, the 50 percent retracement of the 2008-2011 climb, and then at $0.8500. Much of the weakness happened late Wednesday when a convincing break of major $0.8640/50 support gave the market a green light to sell further. It briefly rallied after a jobs report at home showed employment bouncing by 24,100 in October to keep the jobless rate steady at 6.2 percent. But the rally was short-lived as investors saw an opportunity to sell anew.
The Aussie even came under pressure against a broadly wobbly euro, which leapt two cents to A$1.4555 in one session. The only bright spot for the Aussie was against its kiwi cousin. It rose 0.3 percent to A$1.1160. The New Zealand dollar slipped 0.5 percent to $0.7693, having plumbed its lowest in more than two years at $0.7668. Not helping were doubts about the reliability of the data. The Australian Bureau of Statistic (ABS) had to adopt an entirely new method of seasonal adjustment to deal with problems in its jobs survey. The Aussie fall will be warmly welcomed by the Reserve Bank of Australia (RBA), which has been calling for a lower currency to help offset falling prices for the country's major commodity exports.
Interbank futures were unchanged as the market still assumes the RBA will stay on hold for many months to come. New Zealand government bonds fell, pushing yields as much as 3 basis points higher. The government had no trouble placing NZ$1.5 billion in a new 2035 bond issue through syndication. Australian government bond futures were firmer at the longer end. The three-year bond contract was steady at 97.460 while the 10-year contract added 4 ticks to 96.735, leading to a flattening of the curve.
Comments
Comments are closed.